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Ukraine’s President Convenes ‘Round Table’ Riot Police Push Into Kiev Square as Crisis Grows
(about 11 hours later)
KIEV, Ukraine — Ukraine’s embattled president, Viktor F. Yanukovich, who is facing the dual problems of a financial crisis and protesters in a central square here in the capital, convened Tuesday what his government is calling a round-table discussion of cultural figures and former politicians. KIEV, Ukraine — Battalions of Ukrainian security forces early Wednesday stormed Independence Square, the central plaza in Kiev where protesters had been rallying against the government of President Viktor F. Yanukovich for more than two weeks. 
Before the talks, Mr. Yanukovich strengthened his negotiating position by boosting the police presence in Kiev. While the main demonstration continued in the plaza, Independence Square, on Tuesday, the police dislodged protesters from several smaller outlying camps they had erected in a district of government buildings, largely without violence. Hours after senior Western diplomats arrived here for meetings with Mr. Yanukovich in an effort to defuse both the country’s slide into a political chaos as well as a deepening financial crisis, thousands of riot police officers and internal ministry troops fanned across Kiev, putting the Ukrainian capital in a virtual lockdown in the cold predawn darkness. 
Mr. Yanukovich was expected to meet with three former Ukrainian presidents, Leonid M. Kravchuk, Leonid D. Kuchma and Viktor A. Yushchenko. The format of the meeting and its name, the round table, appeared borrowed from the negotiations that defused the street protest movement here in 2004, known as the Orange Revolution. Officers descending on a slope past the Hotel Ukraina smashed through a barricade that protesters had heavily reinforced. 
Senior envoys including the European foreign affairs chief, Catherine Ashton, and an assistant secretary of state, Victoria Nuland, arrived in Kiev to convey the message from Western governments that the protests should not be dispersed violently. There was fighting and shoving matches as officers pushed into the plaza from virtually all sides, taking up positions and blocking the crowd’s movements with interlocking shields. At least one of the tents erected by demonstrators caught fire.  
The renewed diplomatic maneuvering was intended to prevent a repeat of the bloodshed during a crackdown by the police in Kiev on Nov. 30, and to contain the widening civil uprising, which has plunged the nation into deep uncertainty. As the security forces spread throughout the square, a large crowd of protesters brandishing sticks, clubs, metal rods and anything else they could find massed in front of the Trade Unions Building, which leaders of the demonstration had turned into the headquarters of what they call the National Resistance. Fistfights and shoving matches broke out on streets that the demonstrators had slicked with water that swiftly turned to ice.
The State Department issued a statement on Monday saying that Ms. Nuland, in talks in Moscow, had conveyed the American position that “the U.S. supports Ukraine’s European choice, a nonviolent and just political resolution to the current standoff, and a return to economic health with the support of the International Monetary Fund.” The crackdown by the authorities came hours after a meeting between Mr. Yanukovich and Catherine Ashton, the European Union’s foreign policy chief.
Yet the Western envoys’ leverage appeared to be waning as new details emerged of the Ukrainian government’s successes in securing bailout financing from China and Russia in place of aid from the I.M.F., which would likely be contingent on a peaceful resolution of the domestic political impasse. Western leaders, including Vice President Joseph R. Biden Jr., who spoke by telephone with Mr. Yanukovich on Monday, have sternly warned the government against the use of force on peaceful protests.
On a presidential visit to China that coincided with the beginning of the protests, Mr. Yanukovich negotiated an agreement for Chinese companies to invest $7 billion in the development of a port on the Crimean Peninsula, on the Black Sea, the Russian news site Gazeta.ru reported Tuesday. It seemed likely that the enforcement effort would have serious diplomatic consequences, especially because Tuesday had largely been a day of consultations and discussions among senior officials. The talks with Western officials had largely focused on Ukraine’s acute financial troubles; a deepening cash crunch could leave the country broke within months.
The Ukrainian government’s website had earlier claimed progress in securing billions of dollars in Chinese investment in a chemical plant and on a long-negotiated deal to lease Ukrainian farmland to Chinese agribusiness companies. Along with Ms. Ashton, Assistant Secretary of State Victoria Nuland returned to Kiev after making a brief visit here last week. Mr. Yanukovich also met with the three former presidents of Ukraine, to begin what the government described as a process of “round-table” discussions to resolve the crisis.
Russian commentators have said the state gas monopoly might offer Ukraine a discount that would potentially save Ukraine $9 billion annually. President Vladimir V. Putin has said Russian banks and companies have lent Ukraine a total of $30 billion. The Russian Parliament was expected to pass a resolution on Tuesday denouncing Western political interference in Ukraine. Amid the deepening financial crisis, the streets of Kiev erupted in violence early Wednesday. After initially punching through the barricades that protesters had established around the perimeter of the square, security forces began more aggressive efforts to take them down. At one point, they attached a rope and pulled one of the main barricades down with a winch.
In fact, the soft power of Western finance has been in decline in Ukraine since the onset of the global recession in 2008, when European and American banks withdrew financing to meet liquidity obligations at home. This fall, rising interest rates in anticipation of the Federal Reserve’s tapering of its loose money policy priced Ukraine out of Western bond markets. Protesters in construction hats, bicycle helmets and other protective gear then rushed toward the police, with blows being landed by both sides. The police also began deploying canisters of tear gas, creating plumes of smoke around the swirling crowds.
Now, caught in a tug of war between European and Russian interests, Ukraine faces a severe economic crisis and is in immediate need of an aid package. Even with Chinese investment, if it materializes, Ukraine would need about $18 billion in outside assistance to roll over government debt and meet payments to Russia for energy imports by early next year. By 3 a.m., witnesses said, the police had largely divided the crowd into sectors and had cleared a substantial portion of the plaza. The security forces were standing in formation but did not appear to be making any arrests.
The value of the Ukrainian currency, the hryvnia, has been increasingly unstable. The official exchange rate is 8 hryvnia to the dollar, though the currency was already trading on the interbank market above that, at about 8.2, and some banks in Ukraine have reportedly stopped retail foreign exchange operations to prevent panic selling. There was no apparent provocation for the aggressive police advance. Early on Tuesday, demonstrators had milled about on Independence Square as they have since Dec. 1 — when it was first occupied after a huge demonstration that drew hundreds of thousands. That rally was animated by public anger against a brief but bloody crackdown by the police against demonstrators the day before.
In notes to investors, financial analysts are increasingly questioning the Central Bank’s ability to maintain the fixed exchange rate through interventions in the currency markets; hard currency and gold reserves have fallen to $18.8 billion, the lowest here in years. Late on Tuesday night there were a series of intermittent blackouts — unusual for Kiev — that apparently foreshadowed the impending police action.
As the violence unfolded, borrowing costs for Ukraine rose to their highest level in years and the central bank was forced to intervene to support the currency as investors fled from a country with its government under siege, no budget in place for next year and an increasingly acute need for a rescue package of as much as $18 billion.
Ukraine also remains caught in a tug of war between Europe and Russia, which are vying for political sway over the country’s future. They are both deeply wary of putting up cash, however, given the uncertain political situation and Mr. Yanukovich’s long track record of playing East against West, most recently
backing away from sweeping political and free trade agreements with Europe that had been years in the making.
In rejecting the accords, Mr. Yanukovich said he could not accept conditions of an accompanying rescue package from the International Monetary Fund. He was also under heavy pressure from the Kremlin, which threatened draconian trade sanctions if Ukraine signed the trade pact with Europe. If Mr. Yanukovich thought he was making a clever maneuver, stringing along the European Union while he extracted a better deal from Russia, the plan exploded when protesters headed into the streets.
“Yanukovich was playing a game where he thought he could maneuver the E.U. and Russia to his benefit,” said Stephen Sestanovich, a Russia expert and a senior fellow with the Council on Foreign Relations. “The whole idea was to get both sides to pay.”
Instead, he now has no deal with anyone. Russia has indicated some willingness to help, potentially with a combination of lower gas prices, the refinancing of existing debt and, perhaps, a small bridge loan, but not until the political turmoil has been resolved. A Russian deputy prime minister, Igor Shuvalov, said in New York on Tuesday that Mr. Yanukovich and President Vladimir V. Putin of Russia would meet again in a week.
The possibility that Ukraine would be tipped back into Russia’s orbit has set Western officials scrambling, in part to put together a somewhat more palatable aid package that perhaps would persuade Mr. Yanukovich to reconsider signing the accords.
Opposition leaders here said that they had received assurances in a meeting with European ambassadors that Western financial assistance was still available for Ukraine, and could serve as an alternative to a Russian bailout, though the discussions remain preliminary.
But there was no indication that the I.M.F. was softening its loan terms. The fund has maintained that to qualify for aid, Ukraine must take some tough steps, including judicial reforms and a cut in energy subsidies for residential consumers. There have been no new discussions between Ukrainian leaders and the fund since the collapse of the accords two weeks ago, and the conditions for assistance remain the same, said Olga I. Stankova, a fund spokeswoman in Washington.
Mr. Yanukovich, in comments posted on the presidential website, said that Ukraine would resume negotiations with the I.M.F. and that he had received assurances from Mr. Biden this week “that the issues with the International Monetary Fund are almost resolved.” .
“If there are conditions that suit us, we’ll go that way,” Mr. Yanukovich said, according to his office.
Mr. Yanukovich said he told Mr. Biden that Ukraine would not accept stiff conditions. “I said that if there are conditions that are offered to us, freeze wages, pensions, raise gas prices — we do not need such loans.”
Many financial analysts say that without such austerity measures, Ukraine’s economy will remain in a slow death-spiral and that any rescue effort will fail.

Oksana Lyachynska contributed reporting.